Rattaj’s ‘Czech Aspen’ ambitions stay on-piste
An alliance of shareholders at the company Melida, who last year hired a ski resort from the Czech Sports Union in Špindlerův Mlýn – the Czech Republic’s most famous high-end ski resort town which is known as ‘Špindl’ or the ‘Czech Aspen’ to Czechs – has dissolved after a year in favour of one partner who has ambitious plans for the location.
Rubber tycoon Tomáš Němec has bowed out of the running by selling his Snowhill company, and with it a 50 percent stake in Melida. Buyer Igor Rattaj confirmed to weekly Euro that the transaction was about to go ahead, just prior to it taking place.
The Slovak billionaire is a shareholder in Tatra Mountain Resorts (TMR), which is the other 50-percent shareholder in Melida, and a partner of J&T. The details of the transaction mean Rattaj has acquired 100 percent of the shares in Snowhill, which operates additional ski resorts, for example Herlíkovice. According to Euro’s information, Rattaj wants to acquire a total of six ski resorts before the start of the winter skiing season.
Potential for non-payment
The transaction could prove advantageous for both sides. Němec has rid himself of his ski interests under favourable financial conditions. Both social and economic reasons lie behind Rattaj’s interest in Melida. Hitherto, the billionaire has lacked opportunities to operate businesses in the Czech Republic; thus, his direct coownership of the biggest company in Špindlerův Mlýn can notably increase his status in the country. Additionally, there are clear financial gains to be made from the deal.
Tatra business interests have already essentially been running Melida for a year, and have expressed considerable satisfaction with the way their first season in the northern Czech Republic Krkonoše Mountains turned out. The company’s top management is, by all accounts, set to see this satisfaction reflected in glowing financial results. After spending more than CZK 40m on annual hiring costs (calculated last year by the Czech Sports Union on the basis of the most favourable results for the ski resort in recent years), Melida is now set to see net profits of dozens of millions of crowns. Rattaj has declined to release more specific figures before the year’s end.
According to Rattaj, aboveaverage snowfall last season helped bring about a bumper year. However, TMR management has hitherto lacked an opportunity to deploy its knowhow in managing the operation. The first major changes will only be visible in the ensuing season. And the resort’s operators believe that this will bring about a significant increase in profits.
Specific optimism on the part of Hlavatý is shown towards the potential of the skiing operation. In comparison with Jasna in the Slovakian Low Tatras, where TMR generates revenues of around EUR 12m on ski lift usage, last year Špindlerův Mlýn generated EUR 10.5m. And that is before the planned expansion of much-needed extra ski lift capacity has even begun. Consequently, an expansion of both the number of available slopes, and available ski lifts, is expected to bring increased visitor numbers to the site.
The purchasing power of skiers in Špindl, who mainly arrive from Prague, is also greater than that of average visitors to the ski resort in Slovakia. Per visitor daily revenues are notably higher, and are expected to grow further as more services become available at the site.
The basis for expansion
For TMR, the purchase of Snowhill also means establishing a base for future business operations in the Czech Republic outside of the centre at Špindlerův Mlýn. Presently, Snowhill owns Herlíkovice ski resort, as well as three smaller centres also in the Krkonoše Mountains; it also owns resorts in Kašperské Hory in Šumava and in Mariánské Lázně. Potential complications are the fact that TMR is listed on the stock exchange and that Snowhill is burdened by unresolved obligations related to its founder, controversial businessman Karel Vacek. These elements make business takeovers very difficult.
Vacek founded Snowhill in 2002, operating ski resorts in Herlíkovice and Ještěd – the second of these faced significant disputes with the Liberec regional municipal authorities. There followed generous investments but economic headwinds thwarted Vacek’s ambitions. Snowhill built modern ski lifts in Ještěd, attracted visitors and ran the resort in a manner more professional than was customary at the time.
Yet, profits remained shaky and ultimately Vacek was forced to sell the resort back to local authorities. Liberec thus had to take over the centre, including swallowing a pre-existing investment loan of CZK 0.75m. As a result, locals have little nostalgia for the days of Snowhill.
Ultimately, after six years of struggles, Vacek sold the company – along with several unresolved and contentious obligations – to Němec. Further entrepreneurial efforts in the travel agent arena ended in bankruptcy, and Vacek finally moved to Austria. As a result Němec added to his existing aforementioned resorts and the company began to see an era of successful overall operations. Following the transaction, Rattaj will certainly want to restructure the firm. The aim would be to transform its viable components into a company able to acquire additional large resorts in the Czech mountains – as in such moves TMR sees significant development potential. According to information obtained by Euro, negotiations are already underway with potential takeover targets.
In Slovakia, the TMR venture has met with considerable success. It all began during the post-communist privatisation era, when the company acquired Tatranské Lanové Dráhy (cableways). Tatra Mountain ski lifts were in dire need of investment, which the stateowned national railway operator was unable to fund.
Today, TMR does not merely operate ski resorts, but also owns a number of luxury hotels. In the High Tatras, these are Grand Hotel Praha in Tatranská Lomnice and Grand in Starý Smokovec. It also operates Hotel FIS in Štrbské Pleso. In the Low Tatras, TMR runs Grand in Jasna and Tri Studničky in Demänovská Dolina, Hotel Srdiečko and Chalets Jasná de Luxe. Significant revenue is also generated by a large aquapark called Tatralandia not far from Liptovský Mikuláš.
In Špindlerův Mlýn, however, the company is in no rush to move into the hotel business. No wonder. Present accommodation in the town exceeds its skiing capacity. But Rattaj concedes that related offers have been coming his way, and the company is evaluating them accordingly. Presently, the only likely hotel endeavour in Špindl is the takeover of the Palace Hotel, which fell through as collateral for J&T bank, and belongs to the J&T Group, just like TMR.
Unlike the hotel business, TMR sees potential for expansion in the Špindlerův Mlýn gastronomic sector. In Slovakia, ski-related food services are growing by an astronomical 70 percent annually. It is commonly said that the refreshments side of life on the slopes at Špindl represents a particular weak point.
Total revenues for the Slovak company – as yet unaudited for the fiscal year 2013 year ending in October – totalled EUR 60m, while earnings before interest, taxes, depreciation and amortisation (EBITDA) reached EUR 17.2m. Total revenues for TMR in the first nine months of 2013 reached EUR 42.3m with EBITDA climbing to EUR 14.7m. Results for the first three quarters of 2013 are on a par with all of 2012. The company expects that it will achieve an operating profit of more than EUR 17m. And the five-year-long programme of massive infrastructure investments by TMR continues. This year, the company aims to invest EUR 45m.